The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters

I recently completed a very interesting book written by Gregory Zuckerman, a Wall Street Journal reporter called “The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters,” published by Portfolio/ Penguin Press in 2013. Zuckerman is also author of “The Greatest Trade Ever.” I highly recommend this book as it is as entertaining as it is informative, in multiple ways. It gives you a clearer picture of the risks and rewards of fracking, but also shows how hard it is to both glean the fossil fuel you are seeking and to be so highly leveraged in debt as you do.

The successful fracking companies, usually bucked the odds and the more measured risk takers in the larger companies who had much more capital to withstand some of the risk. As a result, even the ones who had success, usually failed before, after and sometimes during their success, due to the need to be land rich which came at a highly collaterized cost of debt. When some went public, they also had to contend with impatient shareholders. These wildcat developers made and lost huge sums of money, oftentimes with their egos getting in the way of knowing when to stop.

Zuckerman does an excellent job of telling the story of people like George Mitchell, who has been called the “father of shale fracking,” Aubrey McClendon, Tom Ward, Harold Hamm, Charif Souki, Robert Hauptfurher and Mark Papa, among countless others who were key to the success of gleaning natural gas and oil from places that were perceived too difficult to crack. He also defines why methods and strategies are so secretive, as companies will follow suit to leverage off your success. These men and their companies, Mitchell Energy, Oryx Energy, Chesapeake Energy, Continental Resources, Chenier Energy and EOG Resources, were truly the path finders in this process called fracking. They led the US to become more energy independent, yet in so doing, understated or overlooked the risks that came with those rewards.

As I read this entertaining book, I found myself convinced of a preconceived notion, that the main mission of these guys was to make a lot of money, as well as proving others wrong. Some even took delight that their hypothesis was true, even if they had not benefitted as greatly as the company that bought out their rights. Yet, what I also found this lust for money also was an Achilles Heel, and there seemed to be less consideration of what fracking was doing to the environment. They were more content to let the problems be handled by someone else and often belittled the complaints and complainers.

Zuckerman addresses these concerns from the frackers viewpoint earlier in the book, yet does devote an Afterword to the environmental risks that are real. But, before doing so, he notes that George Mitchell, late in life continued to buck convention. Per Zuckerman, Mitchell “gave millions to research clean energy even as he, along with his son and Joe Greenberg, invested in a new shale formation in Canada.” But the quote that interests me most, is by Mitchell who responds to those who contend how safe fracking is:

“Fracking can be handled if they watch and patrol the wildcat guys. They don’t give a damn about anything; the industry has to band together to stop isolated incidents.”

This dovetails nicely with a well-worn phrase I gleaned early on. Even if fracking were safe, it is only as safe as its worst operator. Mitchell, the father of fracking is more than acknowledging the bad operators. His son Todd, who was also in business with his father, said “his father’s work will have had a negative impact on the world if it forestalls progress on renewable energy, instead of giving innovators time to improve wind, solar and other cleaner energy sources.”

Let me close with an even-handed quote from Zuckerman, which frames the issue, yet also notes a caution. He answers the question “Is fracking as bad as activists say, and what will its impact be as drillers continue to pursue energy from shale and other rock formations?” His conclusion is as follows:

“The short answer: Fracking has created less harm than the most vociferous critics claim, but more damage than the energy industry contends. And, it may be years before the full consequences of the drilling and fracking are clear.”

With my reading I would agree with both of these sentences, yet not place the fulcrum in the middle of the scale. I would be more on the side of vociferous critics as the evidence continues to mount and as non-industry scientists are revealing issues. The massive water usage, the seepage of the poisonous slickwater fracking fluid into the environment, the particles that are blasted into the atmosphere which are causing breathing difficulty, and the degradation to the surrounding environment just to get vehicles and equipment into frack are compelling arguments by themselves.

But, the great caution in his last sentence is where we need to focus. “And, it may be years before the full consequences of the drilling and fracking are clear.” This is the bane of any environmental group fighting for people and the environment. Oftentimes, it takes years for the true damage to be seen and felt. Some show up in shorter order, yet when the companies making the money do not want to stop a mission, they can afford to fight people who cannot clearly make a connection. The developers want to settle with each complaint at minimal outlay and move on. Unfortunately, the people exposed to the problem, remain in harm’s way.

A Few Takeaways from Gasland II and USA Today Article on Droughts

If you have not seen the documentary film on the real story of fracking by Josh Fox called Gasland II, which premiered on Monday night on HBO, you need to find the opportunity to watch. Seeing Gasland, his first film, is not a prerequisite, but that is worth watching as well. Fox has blended scientists and fracking experts with local, state and federal officials and the people impacted by fracking into a powerful story line. Below, I will highlight a few takeaways, but I will add to them some thoughts from an excellent piece in the USA Today by Wendy Koch called “High and Dry in Texas” which was printed July 10, 2013. Please note, I will flavor these takeaways with other research and reading I have done over the past 18 months.

Gasland II Takeaways

  • The fracking industry has known for some time the flaws in the fracking processes and has numerous internal memoranda and papers that indicate this. This is a key reason, Vice President Dick Cheney, the former President of Halliburton had language inserted in the 2005 Energy Policy Act that exempted frackers from the Clean Air Act and Safe Drinking Water Act and said they did not have to disclose the chemicals used in the fracking process.
  • The fracking industry employs a highly capable Public Relations firm who has represented the smoking industry and who the fossil fuel industry has employed to dissuade public opinion on climate change. They are responsible for the disinformation campaign to create debate over the issue and the commercials and ads that talk about how “safe and secure” fracking is.
  • Per a fracking expert who worked at Schlumberger, the largest fracker in the world, the cement used around the fracking casing to hold in the toxic water and gas fails 5% of the time immediately – he notes with 10,000 wells that is 500 failures and that is what is happening in Pennsylvania. Over time, the fail rate is higher as the pressure of the new processes is much greater than the older methods.
  • Per several Congress people, the fossil fuel industry has so much clout that the Congress people echo what they are told by the industry. One Congressman said “the fossil fuel industry owns the Republican Party.” Yet, the trouble goes further, as they also have an unhealthy influence of the Democrats including the President.
  • Several former government officials Former Governors Ed Rendell and Tim Ridge of Pennsylvania now represent public relations and lobbying interests for the fracking industry. This is an incestuous business which is unhealthy for us citizens as who is guarding the henhouse?
  • The EPA study showed fracking is causing the water to be toxic and the toxins in the water and in people’s bodies are the same as used in fracking fluids.  The disappointing part is the EPA was told to stand down on their latest report on Pennsylvania which was not publicized and led to the resignation of Lisa Jackson, the head of the EPA who was fighting this battle. The lower level EPA officials said they have been pressured to not pursue these issues, but have told families off the record in PA, fracking is causing their water woes and is found in the unpublicized reports.
  • While the President should be commended for his latest push on climate change action, he should be held responsible for his latest blind push into more fracking. This is highly disappointing that he is not more evenhanded in his review of this issue and has allowed the EPA or is responsible for bullying the EPA. This disappoints me to no end.
  • A key story to me, of which I was not aware, is the impact of fracking on climate change. I knew once you had obtained the natural gas to burn, while the burning was imperfect, its one saving grace is it is much better than burning coal. A Stanford scientist said that thesis is based on incomplete science. He said burning natural gas does release fewer toxins than burning coal, but when you add in the regularly occurring leakage of methane into the air from the imperfect fracking process, the process is actually worse than burning coal. This comment deserves much study, as the fracking scientists speak of the inability to contain all of the gases released.
  • Like Gasland, the people who live on and by fracking sites have been screwed and deserve better. In western states, these people do not even own the mineral rights under their land, so they do not get much compensation at all. This is the real fracking story. These folks have been lied to by the fracking industry, they have been lied to by the state and local officials and they have been betrayed by the EPA and elected officials. When industry masks the impact of what they are doing and the dangers their actions pose to humans, that is criminal.

USA Today Article – High and Dry in Texas

  • This piece focuses on the significant droughts in Texas where towns have run out of water. She discusses how climate change appears to have influenced these droughts. Per a study not noted, the National Oceanic and Atmospheric Administration (NOAA) did a joint global study on climate change published last spring. The study noted while not all long term weather patterns can be attributed to man-influenced global warming, the evidence showed that climate change had impacted and made the droughts in Texas more severe.
  • She also notes the significant amount of fracking done in the state has contributed to the drought. Fracking takes 2 to 6 million gallons of water to frack with per frack. Critics have noted that fracking water is only 1% of the state’s usage, but she cites references that in the fracking areas, that percentage of overall water use for fracking is more like 20%. In other words, in the vicinity of fracking 1/5 of the water used is used for fracking.
  • The article notes it is only going to get worse as the planet heats up and more fracking is done in Texas. The problem that she notes and noted in Gasland II about the town of Dish, TX, is the elected officials and industry are not admitting there is a problem. If you don’t admit there is a problem, it is very hard to intervene. And, this is not just in Texas. Frackers and farmers are fighting over water in Kansas, Oklahoma and California.

I would encourage each of you to see these documentary films (at least Gasland II) and read as much as you can about fracking, including this article. If you concur with what I am about to say, please reach out to your state representatives, governors, federal elected officials and let them know of your concerns. My comment is simple. Fracking is not safe and cannot be made safe. The industry knows this and does not want you to know this. And, if you still wonder, go back to my Vice President Dick Cheney comment – if fracking were so safe, why Vice President Cheney did you feel the need to exempt frackers from the Clean Air Act and Safe Drinking Water Act and give them a hall pass on disclosing the chemicals they use in fracking? In trial law, that is called the smoking gun.

 

 

Gasland Part Two – Continues to beat the real fracking story drum

Let me first say I am not an expert on fracking and I am certainly not a scientist. But, I am a truthseeker and read and watch as much credible news and science sources on this subject. I say this as Josh Fox, who produced, directed and narrated the award-winning documentary “Gasland” about the underlying story of fracking that the fossil fuel industry does not want you to know, was shouted down by one of Bill Maher’s guests on his show for not being a scientist, an attempt to discredit his extremely strong base of knowledge on the subject. Fox appeared on “Real Time with Bill Maher” on Friday as he has made a follow-up documentary called “Gasland II” which will air on HBO July 8. I have written many posts about fracking, but if interested, you can read more about “Gasland” with this link to an earlier post:

https://musingsofanoldfart.wordpress.com/2013/01/27/gasland-a-view-of-the-real-fracking-story/

Fox began his exploration of fracking when he was solicited by a fracking company to drill beneath his land in Pennsylvania. What he found in his exploration in talking first hand with affected people who live on or near fracking sites is a very compelling argument against fracking. What he found by talking with scientists who know and measure the subject is also a very compelling argument against fracking. From what he shared about “Gasland II” it will be beating the “real fracking story drum” even more. It was quite apparent from his work, study and discussions with people who have witnessed first hand or know the subject matter and are not influenced by the fossil fuel industry, that Fox knows his subject fairly well. So, when Niall Ferguson, a Harvard history professor on Maher’s show tried to discredit him, it actually backfired on the Harvard man.

I have noted before that my father told me when people shout or name call, their argument is weaker. And, what I have observed on Maher and others’ talk shows, just because you are an expert or knowledgeable on one topic, that does not automatically make you an expert on all topics. This was not the first time on this show that Ferguson tried to shout others down and not let them talk. So, when Fox finally said you have not allowed me to say anything, Ferguson said you have had enough air time. This was not the Crimson’s finest moment. When Fox was allowed to speak, he showed a tremendous grasp of the issues and shared why we should be concerned.

Let me pause for a moment and note that I did not watch “Gasland” until January of this year. My concerns over fracking began two years ago and were raised when I heard Dr. Sandra Steingraber speak and read her two books – “Living Downstream” and “Raising Elijah.” My concerns became even greater when I read Steven Solomon’s book “Water: The Epic Struggle for Wealth, Power, and Civilization.” By the way, Solomon’s book is the best history and forward-looking book you will find, so maybe Professor Ferguson could give it a read. I also have read summaries of various studies by the University of Texas and several scientific and news reports. Here is what I have found, which jives with what Fox is seeing.

The risks of fracking are known and have been masked by the fracking industry for years. This is why Vice President Dick Cheney, who was President of the largest fracking company in the world, inserted language in the Energy Policy Act of 2005 to exempt frackers from clean air and water acts.

Fracking causes air pollution. The fracking engineers say that at least 5% of the methane, arsenic and mercury gases escape into the atmosphere. There is no way they can harness all of these gases.

Fracking causes water pollution. The chemically toxic water they frack with finds a way into the water table. Water alway does. The chemicals are carcinogenic and cause other issues for humans and animals.

Disposing the water beneath the ground has been proven in Arkansas, Ohio, Oklahoma and in the UK to cause earthquakes. Note, the fracking doesn’t, but the disposal of water deep ground does. Fracking was shut down temporarily in the UK for this reason.

Fracking trashes the infrastructure and environment around the fracking site with road damage and environmental degradation. Fracking does create jobs, but most of them are hired guns from outside of the state. So, the frackers make money, the landowner makes money, the workers from out-of-state make money, and the state and its residents are left holding the bag on environmental and healthcare costs.

– But set all that aside. Fracking takes a huge amount of water. At 2 to 6 million gallons per frack, ten to twelve fracks per well and 1,000 or so wells in an area, that is 20 to 72 billion gallons of water. Water is one of our two dearest resources and we have water concerns already. If you think I am all wet, the frackers and farmers were fighting over water in Kansas and Oklahoma last year and are fighting, as of this writing, in California. Since they grow so much food for us, this should give you pause.

My wife laughs when I say this, but “I didn’t make this stuff up.” Yes Professor Ferguson, I am not a scientist. I am a business person who reads a lot. I am also well aware of Return on Investment (ROI). Treating the environment poorly and using up dear resources which impact people need to be factored into all ROI equations. And, I know a lot of developers as well. Not all, but a typical developer’s modus operandi is “get in, make your money, get out and leave the problems for others.” What I have found is an industry who spends a lot of money trying to misinform others on what needs to be a more open discussion about the pros and cons of fracking. And, as any history professor would know, industry data at its very best is “subjective” when the source has a vested interest in the outcome. At least that is what this non-scientist, non-historian thinks.

Gasland – A View of the Real Fracking Story

About this time last year, I had the privilege of hearing Dr. Sandra Steingraber speak to a group brought together by Clean Air Carolina and the Catawba Water Conservancy. I had been aware of hydraulic fracturing (fracking) and had concerns, but came away with an epiphany. Dr. Steingraber, a biologist, ecologist, bladder cancer survivor and mother of two, has written two books “Living Downstream” and “Raising Elijah” and has testified in front of Congress, United Nations and European Union Parliament about the impact of chemicals in the environment. And, she will tell you fracking is one of the worst things we can do on our planet, unless your goal is to poison people. Two days ago, I had a second epiphany on the subject when I saw “Gasland,” a HBO documentary on the real story on fracking.

If you have not seen “Gasland,” I would encourage you to watch it and draw your own conclusions. It was conceived and directed by Josh Fox, who is a resident of Pennsylvania (PA) where fracking abounds. Yet, his film does not focus only on PA, as he travels the country to areas where fracking has been in existence for a few or many years. For those of you who get Time Warner Cable, it is in the free on-demand section of HBO under Feature Film Documentaries as of this writing. The movie is more poignant given its independent, low-budget approach of a young man talking with people whose lives have been changed forever. Of course, he could not talk with people no longer with us or the spokespeople of the companies who made a fortune fracking at the expense of others who elected not to speak with him.

If you do not have time to watch the film and want to get a quick view of the concerns over fracking, you are welcome to click on a post I wrote back on April 22, 2012 called “The Perils of Fracking.” There are some other posts you could check out, but another post written on June 8, 2012 you may want to pay attention to came from Steingraber’s “Living Downstream” which is entitled “The Precautionary Principle.”

I don’t want to take away from the power of Fox’s movie “Gasland.”  These stories need to be seen and heard. These are the real people impacted by fracking that have been purposefully lied to and ignored and until they became a nuisance and were paid a pittance to be quiet as the fracking company moved on. Or, they may have been provided with some make-shift filtering system that could not possibly filter out the danger. I came away sad, mad and disillusioned that our country could let these people down like this. How could our country purposefully pass legislation giving fracking companies a “Get Out of Jail Free” card?

What do I mean by this statement? Our former Vice President Dick Cheney used to be CEO of Halliburton, the pioneer in fracking technology. In addition to having petroleum lobbyists lead the White House Council on the Environment, where they deleted any references to “global warming” or “climate change” in scientific papers, there were two major actions that gave free rein to the fracking companies, one of which was Halliburton. The first came when Cheney helped get a law passed the sold mineral rights on our public land managed by the Bureau of Land Management. On our public land, fracking companies now had the right to come in a frack. This land was garnered in large part by Teddy Roosevelt to protect water sheds and create public parks open to the public. As we know, water is kind of important.

The second came as very brief provision of the Energy Policy Act of 2005 signed by President George W. Bush. Cheney was able to convince a friendly Congress to include a provision in the Act that prohibited the Environmental Protection Agency from regulating the frackers under the Clean Air Act and the Safe Drinking Water Act. And, it was noted the fracking companies did not need to disclose the chemicals they added to the fracking water to make it easier to frack as they reduced friction, killed algae, broke down minerals and deposits.

Please re-read the bold language again as you likely did a double take as I did. You see the fracking water is so poisoned, it cannot be allowed to go back into the water table. But, water finds a way and it does get into the pure water shed. And, among many other toxic chemicals, glycol ethers are present which are as about as harmful chemicals to humans as you can find. According to Dr. Theo Colborn of The Endocrine Disruption Exchange in Colorado (she has degrees in pharmacology, epidemiology, toxicology, and water chemistry), these toxins cause the very maladies that have stricken the people living near fracking sites. And, she adds it is not just the water they drink. These people breathe the air 24×7 which is filled with the toxins released by the water blasted minerals. Ft. Worth, Texas has twice the level of air pollution that would be in evidence by their normal automobile traffic due to the thousands of fracking sites nearby.

Yet, with all of this said, I have even a greater concern over the use of water in the first place. It takes between 4 and 6 million gallons per fracking well per fracking episode. And, I learned from the movie that fracking wells are fracked up to as many as ten times. Water is very dear around the world and in this country. With the droughts in Kansas and Texas this summer, frackers were fighting farmers over water usage. People will say this does not affect them, but for you folks in Florida, your water was being trucked to Kansas to frack with.

At the end of the day, the Oil/ Gas Industry has a powerful lobbying effort and funds politicians in a significant way. That is why I asked you to read “The Precautionary Principle.” We need to do what other countries do and place the onus on the developer who will make the profit to prove that what they are doing is not toxic to humans. Their data, which is used in GOP led legislatures like in NC (who just approved in fracking) and  in wonderful TV commercials with an attractive spokesperson, is biased and misleading at best. These companies have a vested interest in the outcome. To state it simply, fracking is using our water with chemicals harmful to humans to do something. To have it not subjected to Safe Drinking Water Act is not only unethical, it is criminal and immoral.

So, please watch the movie and be diligent against more fracking. Water finds a way. So, do well compensated politicians. We have to be mindful of both.